Jeremy Hunt highlights that access to £1.8bn fund in 2016-17 will be linked to financial control and making efficiency savings

Board must also protect patient care, and could face suspension if they fail, says the health secretary

Says final Carter report will be published shortly

NHS providers which fail to “balance their books without compromising patient care” will face intervention which could ultimately “result in the entire board… being suspended”, the government declared this morning.

The Department of Health issued a statement highlighting that trusts’ access to a £1.8bn national funding pot in 2016-17 will be dependent on them meeting 2015-16 financial targets; taking actions linked to the Carter efficiency review; and being on course to achieve financial balance next year.

These conditions on accessing the £1.8bn pot, referred to by the DH as “transformation funding” and by NHS England as a “sustainability” fund, and to other national funding in subsequent years, were set out in planning announcements last month. A further condition is for NHS organisations in each health system to agree joint sustainability and transformation plans.

The DH statement stressed that other action could also be taken against trusts, saying: “Providers who fail to put these [efficiency] controls in place and balance their books without compromising patient care will lose their freedoms and control over key decisions and will be subject to closer scrutiny and intervention from national bodies and regulators, until they can demonstrate appropriate grip. Ultimately this could result in the entire board of a trust being suspended.”

It said NHS Improvement chief executive Jim Mackey and Care Quality Commission chief inspector of hospitals Sir Mike Richards had written to provider boards to tell them “there is no choice between quality of care or financial balance – both must and can be achieved”. It said CQC findings “increasingly show trusts with the best quality ratings are also the ones with better financial results”.

The statement also says that the final report by Lord Carter, who has been reviewing procurement and efficiency for the government, will be published shortly, and will:

Require trusts to publish their receipts on a monthly basis for the top 100 items bought by the NHS, allowing them to compare costs and volumes

“Require trusts to improve staff deployment, bringing hospitals into the twenty first century by putting an end to outdated, inefficient paper rosters. Hospitals will be required to use electronic rosters.”

Estimate that a 1 per cent improvement in workforce productivity could make around £400m savings

Recommend that the DH, NHS England and NHS Improvement work on a “strategy to ensure that patient care is focussed equally upon their recovery and how they can leave hospital to tackle the issue of bed blocking”.

Mr Hunt said in the statement: “We believe in the values of the NHS and are committed to its future… But patients and taxpayers rightly expect a return on this investment, so hospitals must improve their financial performance and balance their books in order to unlock this funding.

“Our best hospitals are simultaneously showing tight financial grip, reducing waste and living within their means. We need trusts to raise their sights – failure to do this is not an option.”

Mr Mackey said in the statement: “Trusts that fail to get their finances in order will be in breach of their licence, meaning a loss of freedom over decision making and closer scrutiny from NHS Improvement until they can demonstrate appropriate grip.”